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City Spent Almost $2M More on Troubled ‘Smart’ Water Meter Program Than Authorized

The city water department spent $1.8 million more on its “smart meter” program between 2012 and 2015 than the City Council had approved. The kicker? The money went to buy meters from a company that has since told the city and investors about problems with its equipment.

Those problems may be unrelated to billing spikes that hundreds of city water customers have experienced recently, but could cause other billing problems and be a costly mistake in their own right.

In February 2015, water department officials asked the City Council for retroactive approval to spend what they had already spent on Mueller’s Hersey-brand water meters. Plus, officials said, they needed yet another $1 million. The City Council gave them the OK.

The department’s woes have delayed the city’s $67 million smart meter program. The city wants all of its meters to transmit water use data over a radio network. This is supposed to improve meter accuracy, provide real-time data on water use and eliminate the need for human meter readers.

For now, city workers read most meters manually every two months, as they always have.

Even though the city aggressively spent money to buy new meters, the smart meter project is far behind schedule.

In 2016, the city guessed it could complete the project by the beginning of this year. Now, it looks like it may take another five years.

The city has about 280,000 customers. So far, it’s spent over $19 million making just 16,000 customers’ meters smart. Of those, most are commercial customers. Less than 5,000 are single-family homes.

For months, the project has also been on hold because of homeowners’ concerns about billing errors. Subsequent audits largely blamed the bad bills on city employees who read water meters. There is a separate and ongoing audit of the smart meter program itself.

Now, the city is trying to get the program back on track, arguing that smart meters are the solution to the city’s water woes, rather than the cause of them.

Of course, that involves spending even more money.

The department is now trying to get City Council approval for a $25 million contract to buy more smart meter equipment from Washington-based Itron Inc., a company that makes the radio equipment meters need to send real-time data to the city.

That contract has been in the works for months but seems to have been on hold while the department tries to right itself.

Itron is also at the heart of another debate that has been raging for years inside the city.

David Akin, the former head of the smart meter program from 2010 to 2013, said before he left that job he’d urged the department to let a private company like Itron do more than just sell the city equipment. He wanted a private company to come in and install the equipment citywide.

In a recent interview, Akin said it was unreasonable for the department to expect its current staff to take on all that new work and keep doing what they were already doing.

“That was way too ambitious to expect the city staff to do all this,” he said.

Itron has also been making that argument for years. When Itron first bid for the city job, it offered to do most of the meter installations. Instead, the department tried to use existing staff. Overworking those employees may have led to customer service delays and billing errors.

From the beginning, Akin was a fan of Itron. He believed the city got a good deal from the Itron, because the company wanted to get San Diego as a customer in order to help woo an even bigger customer – the Los Angeles Department of Water and Power.

Now, after everything has fallen apart in San Diego, Itron has been privately urging the city to hire it to do more work.

In February, just after the water department had begun admitting billing mistakes, one of Itron’s vice presidents, Christian Anderson, emailed the city saying the company could finish the smart meter project in just 12 months.

The email, which was released to VOSD and NBC 7 in response to a public records request, included a fake press release Anderson wrote to announce such a deal:

San Diego Public Utility Water Dept. prioritizing automation to prevent overbilling. San Diego Water is partnered with www.itron.com to accelerate the deployment of automated meter reads. What was to be a 2020, completion, will now be completed by June 1, 2019. Itron is a leader in automation technology and service solutions for Water Utilities with thousands of customers in the United States and Globally. The Mayor and Public Utilities Department Director have prioritized this effort with a council meeting on March 8th. “We look forward to deploying our solution rapidly which will provide accurate billing, removing manual reads of meters, and setting the City up for future growth”…. Mr. Cam Paulson, Itron Sales Manager. Add quote from Mayor, Public Utilities Director, etc.

The company directed questions about the email and its work to the city. The city is still responding to records requests that Voice of San Diego and NBC 7 filed months ago.

An audit of the smart meter program may also shed light on why it is behind schedule and whether it’s been a good deal.

Earlier this year, Akin, who is now a member of a committee that is supposed to oversee the city water department, opposed such an audit – which amounted to an audit of the program he once led.

Now, though, after months of revelations about problems inside the department, Akin said he may have had a different view about the need for an audit.

In a recent interview, Akin talked about how and why he pushed the smart meter program and why he thinks it’s been a mess.

He wasn’t the first person to work on the program. He said when he started, he found a “disaster in a ditch.”

Akin pushed for the project, though, because he felt smart meters would save the city money. The city wouldn’t need a team of employees to read meters, wouldn’t need to have trucks driving around the city getting into accidents, would reduce customer phone calls and would be able to spot and replace aging meters faster. Aging meters tend to undercount water use, meaning the city loses money.

Akin said he pushed the smart meter program so hard, he said he felt the city might have gone ahead with part of the project “just so I would shut up about it.”

Akin did lose one battle, which was to immediately switch all 280,000 water meters to smart meters. Instead, the department decided to do a small 11,000-meter pilot program and then see if the savings justified installing them citywide. Now that the pilot is over, the city is working on switching all the city’s meters.

Internally, Akin faced some pushback. The leader of that camp seems to be Jim Fisher, who was then an assistant director in the water department, according to Akin and city documents.

In February 2012, months before the city won formal approval for the project from the City Council, water officials had a “kick-off meeting” for the smart meter program.

While everyone else was talking about logistics, Fisher – now head of operations and maintenance at the San Diego County Water Authority – seemed dubious.

He said that staff hadn’t had enough time to review the project schedule and that more time would produce a better a result.